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Why early 2016 is a great time for residential financing

Posted on Wednesday, January 27, 2016 at 9:27:07 AM

Questions about how rising interest rates would affect the affordability of residential financing in 2016 have been on the minds of potential homebuyers since the Federal Reserve committed to a rate hike in mid-December. Some analysts predicted dire straits for a housing market coming off a banner year. Others offered more moderate forecasts. 

"Long-term interest rates will not spike in response to the Federal funds rate increase," said Sean Becketti, Freddie Mac's chief economist, in a statement made shortly after the decision was announced.

"While we expect the 30-year mortgage rate to be above 4 percent in early 2016, we anticipate rates will gradually increase, averaging 4.4. percent for the year," Becketti continued.

Mortgage rates, however, have so far defied all expectations. Last week they continued to spiral, down to 3.81 percent according to Freddie Mac's Primary Mortgage Market Survey, which spurred mortgage market volume to the tune of an 8.8 percent jump in applications on the Mortgage Bankers Association's Market Composite Index. 

What all this means for potential homebuyers is this: Your time is now. 

These first few months of 2016 are offering borrowers the chance to take advantage of historically low rates. By pairing the first time homebuyer credit with residential financing from institutions like Home Loan Investment Bank, homebuyers should seize this opportunity while it still lasts. 

Interest rates will eventually begin to rise steadily this year, and if borrowers wait too long, they'll be kicking themselves for it by year's end.